Renown Health to Release its Cardiologists From Non-Compete Agreements

Nevada Attorney General Catherine Cortez Masto announced (pdf) the filing of a lawsuit and a settlement against Reno, Nev.-based Renown Health regarding its acquisition of the two largest cardiology practices in Reno.

According to a Federal Trade Commission release, Renown acquired Sierra Nevada Cardiology Associates in late 2010 and Reno Heart Physicians in March 2011, making the health system the employer of 88 percent of cardiologists practicing in the Reno Sparks area.

The FTC filed a lawsuit alleging Renown Health violated federal law by consolidating the two practices, which the FTC said decreased competition and could raise prices for cardiology services in the area. The lawsuit also claimed the non-compete terms of the employment agreement are a barrier to entry into the market because they limit cardiologists' employment choices if they decide to leave.

The Nevada Attorney General filed a similar complaint against Renown Health. Under the attorney general's settlement, which is subject to court approval, Renown Health will suspend the non-compete terms in its employment agreements with the acquired cardiologists for a limited period. This suspension will allow the cardiologists to terminate their employment without breaching the non-compete terms or being subject to other retaliation, provided they meet certain conditions. One of the conditions is that they be among the first 10 cardiologists to submit notice to terminate employment.

If fewer than six cardiologists have sent notification of their intent to terminate employment by the end of this period, which was not specified in the release, Renown Health will extend the non-compete suspension until six cardiologists have terminated their employment. This ruling aims to eliminate the alleged decreased competition from the cardiologists' employment by Renown.

In addition, the settlement requires Renown Health to notify the attorney general of future acquisitions affecting cardiology services in the Reno Sparks area, implement an antitrust compliance program for its executive and cardiology staff and reimburse the attorney general's fees and costs from the investigation, which currently stand at $550,000.

The FTC proposed a similar settlement with Renown Health, which has agreed to suspend its non-compete provisions with the cardiologists for at least 30 days while the FTC considers public comments it receives on the proposed order, according to the release.